CJEU ruling in Lassana Diarra case likely to have profound ramifications for football transfer market and contract law
The European Union Court of Justice (CJEU) has recently issued an important ruling that calls into question key elements of the functioning of global football’s transfer system, in a move that could have seismic repercussions for players and clubs akin to 1995’s Bosman ruling.
In October 2024, the CJEU handed down its judgement in the Lassana Diarra case (C-650/22 FIFA v. BZ). The verdict will almost certainly lead to fundamental changes in what happens to players when their contract is terminated without ‘just cause’ and ultimately could enable players to walk away from their contracts and sign with a new club without a transfer fee changing hands, which could have a profound impact on club finances.
The experience of former Arsenal and Chelsea player Lassana Diarra over a decade ago is central to the case. In 2014, Diarra’s contract at Lokamotiv Moscow was terminated following a dispute over his salary, with the club claiming Diarra was in breach of contract. FIFA’s dispute and resolution chamber supported Lokamotiv’s claim for damages, fining the player €10.5m. Diarra was then unable to accept a contract offer from Royal Charleroi S.C., as the Belgian club wanted assurances that they would not be liable to cover any of the costs owed to Diarra’s former club.
In December 2015, Diarra brought action against FIFA and the Belgian League, arguing he had lost earnings as a result of FIFA’s refusal to give the guarantees Charleroi required. Diarra’s lawsuit is still ongoing and will ultimately have to be decided by the Belgian courts, but the CJEU was asked for its opinion about the implications of two key elements of EU law: the right to freedom of movement for individuals, and the preservation of competition within internal markets.
Led by Jean-Louis Dupont, the lawyer who successfully negotiated the Bosman ruling 19 years ago, Diarra’s legal team successfully argued that his treatment was unfair, with the Court finding that elements of FIFA’s transfer rules are incompatible with EU law. And, just like the Bosman ruling to which it is being compared, the verdict has the potential to upend the transfer market status quo.
The key outcome is that players may be able to exploit the ruling to successfully break their contracts and find new clubs, without being held accountable for financial penalties for breach of contract, and without their former club being able to demand transfer fees.
The immediate priority for FIFA will be to redraft the rules so they are compatible with EU law, including addressing how any compensation can be determined, but in the meantime at least the ruling has fundamentally shifted the balance of power from clubs to players.
FIFA is yet to make its final case to the Belgian appeal court but given the CJEU’s ruling it seems inconceivable that football’s world governing body can argue it is not in breach of key tenets of EU law. In preparation, FIFA has started a consultation with key stakeholders to adapt article 17 of the Regulations on the Status and Transfer of Players (RSTP). The redrafted rules will need to strike a fair balance between protecting the commercial viability of the transfer market while complying with EU laws governing competition and freedom of movement.
The case has heaped further scrutiny on FIFA as a self-governing rule maker. As the chief executive of the Professional Footballers’ Association, Maheta Molango, has said, the Diarra ruling demonstrates that football will now have “to work within the same employment laws that apply to any other industry”.
FIFA may be used to setting its own rules, but the reality of supranational law means those days may now be numbered. Followers of the beautiful game have become accustomed to eye watering transfer fees in recent years, but if players can simply terminate a contract and walk, how many would still be willing to take a gamble on an astronomical transfer fee? And will clubs be able to recoup the money they have invested in assembling their squads, or risk watching players leave for nothing mid-way through their contracts?
A decade in the making, we’ll soon hear the final whistle in Lassana Diarra’s case – for FIFA and football clubs alike, this is ‘squeaky bum time.’
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David Little is a Partner at Bishop & Sewell in our expert Sports Law and Corporate & Commercial teams. If you would like to contact him, please call on either 07968 027343 or, 020 7631 4141 or email: company@bishopandsewell.co.uk.
The above is accurate as at 09 December 2024. The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
